By how much would the reduction in assets

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Question - Last year Coral Gables Corp had $410,000 of assets, $403,000 of sales, $28,250 of net income, and a total debt ratio of 39%. The new CFO believes the firm has excessive fixed assets and inventory that could be sold, enabling it to reduce its total assets and total invested capital to $252,500. The firm finances using only debt and common equity. Sales, costs, and net income would not be affected, and the firm would maintain the same capital structure (but with less total debt). By how much would the reduction in assets improve the ROE? Do not round your intermediate calculations.

Reference no: EM132926071

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